Wednesday 12 March 2014

Mixed messages

The US  market is giving mixed messages. The S&P is pulling back from a new all time high, but today's price action so far suggests that the period of weakness may be coming to an end.



The Dow on the other hand is pulling back from a lower high. This could indicate the end of the bull run. Two support diagonals, one short term and the other long term offer points where we might see a turn in the market.



The FTSE is definitely struggling with repeated vicious pull backs. However there is a succession of new highs so it's not all bad news.



The DAX is also a basket case when viewed in the short term, It's suffered a 6% fall from its latest high. But looked at in the longer term it is up at least 75% from the low it hit in September 2011.



Will it all end in tears?


Will it all end in tears? My answer: could go either way. We must be ready for anything. The Ukraine situation hasn't gone away it is lurking, ready to pounce. And there is talk of raising interest rates. Not now but soon. That could hit sentiment. On the other hand there is all that QE money still going free. Linked to this is the level of margin trading which is now well north of $400 bn on the US markets. The chart makes it clear that margin trading is drawn by stock performance. However, at this very high level it will act as a catalyst for very sharp falls as investors are forced to unwind their positions if prices begin to weaken..


Gold

On a happier note, for me at any rate, gold has broken out of its triangle. I hope it continues onward and upward. Gold and silver mining is now my only area of short term investment. I have taken some profits and jiggled my portfolio. My present portfolio is, in US: PPP MDW RBY PZG SLW MUX AUMN; in the UK: CAML RRS CEY.



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